tv Capital News Today CSPAN July 27, 2011 11:00pm-2:00am EDT
like this come around everyone's 100 years parent they continue -- 100 years. we are losing this great country every single day. imagine having to negotiate with barack obama or harry reid. get eric kanter and john boehner every credit in the world but emboldened them. let them know the american people are ready for a real reform. keep pushing it. this country will not turn around with out you.
god bless you. thank you for coming out. >> isn't it great to have such a terrific leaders holding the line for us? it is a great thing. i am with the american aggressors foundation. i have a friend of mine. she's also the chairwoman of tea party express. >> thank you. we did not even let you know until yesterday afternoon this .ally is so imports appea
christina was on her way back to florida and heard about the rally. to change your flight plans and came here. it is for our children and grandchildren bear we want these republicans to hold the line. we have given the democrats' two plans. they need to pick their poison. they propose nothing. what is their plan? we are in control.
we control the purse strings. we need to force and to bring it back into the senate floor. let's have a transparent debate. the legislation came about from a pledge that the movement's support appearing in next congress can come in and spend 20 or 30 trillion dollars. we need permanent mechanisms in place so we will not find yourself in a situation. that is why we want it. it is only a year and a half ago.
everybody said there is no way scott brown could win the ted kennedy seats. look what happened. bring this legislation back . flight is a false a 66% of americans support the? -- why does 66% of the american support this but the signatures have control debt? the republicans are losing this war. this is about our credit being downgraded. why will of the downgraded debt because of the enormous amount of debt that we have.
american families and businesses are having to balance their budget. money does not grow on trees. the only put it on the presses. it is time to stop. we have supported these conservatives. what do they not get about that at if these people did not stick to the physical conservatives em principles and values, then they will be voted out as fast as vote in.
we will not take it anymore. while it is great to do things on a national level, it is the leaders that make things happen on a local level. i want to bring up one of the greatest leaders. >> we have discussing the biggest problem in d.c. it keeps pouring in. on one side, you have the taxes spenders. on the other side, you have people fighting. it is a tug of war. it is our tax dollars at stake.
there are playing with that money. it is time to have a plan. it decided to get in line with the house. they own the purse strings. >> we need to help them hold the line. we have to grab all hold of it yank.he yanke everybody fornkinthank coming out here. america is not going to tolerate as much longer. thank you.
they cannot seem to figure out where we're going to get these from. when you are overspending, the easiest way to get back is your over spending. we forgot it is a onetime stimulus bill. if you want to know where to get the money back, look where we are spending the extra money. you will find places you can cut. this includes fighting to ward's. there were 100 billion of
to make sacrifices. they have to cap their spending. they have to budget wisely. we have to expect the same thing from our governments. it comes down to what we're leaving for our children. we can no longer allow congress to continue to spend and passed on to our kids. it is done. we have to stand up. american families have to balance their budgets. thank you p.m..
u. we are broke. we care because we are americans and that is our future. we're having this rally to hold the line. we have some people with some teachers. hold the line. we want you to know that as americans and patriots we are tired of them not holding the line. a congressman spoke to us today. we have to stand up and tell these people.
god bless america. >> it is really important that we are here today. we are putting the pressure on these people but are in these halls right now. they're working on legislation that affects everybody. we are the reason it has not been raised. we are the reason washington and democrats are talking about cutting spending. windy remember that happening? it is because of people that have taken time away from your family.
we are watching you. we are paying attention. we're not going away. this movement has grown. we have done amazing things. we have brought conservatives to washington and brought great friends. senator demint said you need to bring a friend of here. we brought some great conservatives. we're glad to bring more conservatives. that is what this movement is all about. this is not about the republican and democrat.
they're the ones in control of that spirit you can make that happen. it will take all of us. allow it to go on talk to your families and friends. we have so many messages today. people said they would do anything to be there. but this rally together. we put it together at the last minute. things are happening so rapidly. this is not the way our government is supposed to operate. we need to have accountability. if you're dealing behind closed doors, you're dealing with the devil. that is the bottom line.
we as americans are not going to assess it anymore. i'm going to bring jennifer back up. he spoke a couple of it is a wet, cold rain. i challenge them to find common nominate, and a leg individuals that believe as they believe. they believe in self response ability and sustainable government. the reason the debt ceiling has not gone of today is because you
have been affected. you have enough conservative representatives that regardless of what the leadership wants to do, if they do not have the vote to pass it. it would be too severe. they would have a huge stature mental impact. our house is burning as we speak. is the price of gasoline going down? it reflects the value of your american dollar. they are all the indicators that as we speak our leaders are devaluing our currency. you and i need to continue to go
out, find common nominee, and select individuals of believe as a bully. thank you. >> i want to remind everybody that this rally is not about politicians. it is about americans. we want to make sure the voices were heard. this is the purpose. they will take bad medicine. welcome. >> you know, as did appear peering -- you know, we had it. it is disappointing more people were out there.
what we have going on is as important as that vote. i am from that group. if we are representing the people. people came out in the election last year. they are telling the republican party that we will not put up a business as usual. even in states like washington state, she just left. thank y'all.
she is a service dog and training. penelope has more sense about the debt of some of what we have seen. how dare he? this president has put this more in debt with one budget than president reagan did in his eight years. how dare he tried to compare ?imself a there is a song from toto called hold the line.
. the next time, we will not have to go through this. thank you for coming through. >> thank you. america. this is it. this is our opportunity. harry reid is sitting on taxes that can deliver the did could looking for did that can deliver the good spirit -- harry reid is sitting on taxes that can deliver the goods.
our opportunities are being killed now. our children's are being killed now. i massy all my party patriot friends to call your senators. avoiding his response of the house he -- his response ability in terms of credit ratings. e-mail them. hearing itward to se in the news. have a good day. but thank you. >> thank you. i am so glad we had such a
strong core of constitutional conservatives in america. glad the tea party movement has risen up to say let's take our country back. i'm glad you understand that is our road map. and our fiscal responsibility. it is not the easiest thing to do when you that all the maneuvering. it is impossible for a one to go in here from the outside. the analyze it and analyze the policy and figure out what goes forward. i heard the you like this a but.
the other kind of the kind that do not know they know the future. we know the killers of america and its sectionalism. we know what we have seen. we can identify those pillars. let your voice echoed through the walls of this capital. this is what our founding fathers envisioned. they wanted you to be here today when they but that provision in. they did not want to see a nation in debt. they wanted this to see our bill. they did so three of those years. i saw a budget come third.
when you look at the bottom line, and balances. i have three sons in their early 30's. this proposal before us cut out of next fiscal year $7 billion. the balances in 26 years. we cannot hold this on the budget with this bill that is becoming the floor of the house. if we can at least hold it on a budget that balances, which is a budget that we except in 2012 that never might come first.
somebody has to use the leverage that we have. there is not a dime that they cannot spend. all standing bills have to start in the house and have to be affirmed by the house. what ever harry reid thinks and president obama things, we either have to agree with that or they have to agree with us. we can shut it down and we can hold the line. and one of those things that i have put a marker down on hard and early is the repeal of oba macare. every republican came to this congress on the pledge to repeal obama care. every republican in the house and senate and some democrats
have voted to defund obamacare. if they put the repeal of obama care of and attach it to a debt celing, -- ceiling, if it attaches to a modest debt ceiling increase, i will want a balanced budgets. even when that day comes that this congress releases the iron grip. when the house of representatives and the senate would finally released their grip on that and let it go to the states, what are we doing? i asked 3/4 of the states to ratify a balanced budget amendment to require us to do what we know we need to do anyway. we don't have enough strong
people in this congress to get the job done. but we do have enough people, i think, to hold the line and stand strong today, tomorrow, this week. let's get a balanced budget amendment and let's repeal obamacare. let's get to the point where the children and grandchildren will not be paying off the debt of our time. hold the line, god bless you. >> thank you, congressman king. we are going to help him hold that line. it has been a long weekend and a long couple of days for amy and die. we could not have done that without people across the country. what he wants you to know is that we did this because if is such an urgent matter. and guess what, they are trying to do it really quick and really
fast. we are going to -- say it again. hold the line. that's right. we have another great congressman paul brown from georgia who is definitely holding the line. >> right off the bat, i plan to use -- i will not vote for any bill that raises the debt ceiling. [applause] we are broke. what we are overextended. we spent all the money in the bank and then some. yet everyone in washington talks about raising the debt ceiling. which means giving barack obama and harry reid more of your money to spend. we must not do that.
i don't hear anyone talking about the most important factor in this equation. that is the massive, and normans, outrageous, national debt. if you want to get the economy back on its feet, we have to start paying off the debt and cleaning up the mess that president obama and big spenders of both parties have given us in the past. we need to lower the debt ceiling. so that this never happens again. we can leave a better america for our children and grandchildren. after watching president obama's address the other night, it was pretty clear to me that he was making a campaign speech. he wants to raise taxes on job creators and small businesses. it would not go into effect until after reelection. he is promising trillions of dollars of future cuts but you and i know will never
materialize. kind of reminds me of the cartoon character wimpy. i will pay you tomorrow for a hamburger today. i don't want to give him the hamburger. i would like to tell the president, the american people are smarter than this ponzi scheme he is trying to get us. we are not going to buy into it, are we? we need immediate and hefty spending cuts. we need to pay down our national debt. we need to do with a business does leggett overextended. it lowers the borrowing limit and find a way to pay off the debt. cut expenses across the board and look for ways to raise revenue. hi democratic colleagues want to raise taxes. that is not the answer. we need to raise taxpayers, not taxes.
we need to create a strong economic environment so that small businesses can flourish and thrive and hire new people. we need to lower energy costs. we can get more revenue into the federal government by leasing out energy resources to the weekend lower gasoline prices and create jobs. but security in the economic environment so that the job creators feel comfortable hiring new people. that is what we need to do. we must not raise the debt ceiling. we must not raise taxes. we must raise a strong economy. we must raise a strong america. i will vote for america by not voting for this increase. thank you for being here and keep up the fight. god bless you. >> thank you so much,
congressman. i want to thank all of you for coming out here today. the party express is proud to be part of this rally with coalition partners with cut cap and balance. i want to announced that we are here talking about holding the line. next week, tea party expressed is taking our bus and going to a bus tour to support gov. walker and the senators that are being recalled. they have taken the tough steps that we want these people here to take. and they are being challenged for its. they need our support. we will go and support them. we hope all of you that have turned out today will do the same thing. it is kicking off a national bus tore on august 27. you can get more information on our web site. we are going across the country
for two weeks and we end up in tampa, fla. for the first ever he party presidential debate. we need to keep the pressure on. what these halls. if you can't walk the halls, i know people are out there that are not here watching this. melt the phone lines. it is only us that will make a difference. no one else in your country is counting on you. thank you for coming today. god bless america. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
>> this is a difficult time in the life of the people of this country. families are hurting. our economy is struggling. the economic policies of this administration have failed to turn around this great recession as it has come to be known. and i believe that run away federal spending, deficits, and debt are a barrier to our economic recovery. a barrier to putting americans back to work. we have change the fiscal direction of this government for this generation, for jobs for americans today, and for future generations. who are facing a mountain range of debt.
$14 trillion national debt. $1.65 trillion deficit this year alone. at most of my colleagues know, i fought against run away spending on a bipartisan basis. i opposed big government plans when they were offered by republican presides and in republican congresses. i thought -- fought with equal vigor with the spending, bailouts, and takeovers of the recent democrat congress and this administration. but now we come to another debt ceiling vote. and as the late russell kirk wrote, politics is the art of the possible. the american people are looking in and they know if you odette you pay debts. we have -- if you owe debt you pay debts. we have to find a way to pay the bill. the american people also know we have to find a way to set our nation on a course of living within our means once again.
now, i am still studying speaker boehner's proposal. but there is much that recommends it. i have long said there should be no increase in the debt ceiling without real and meaningful spending cuts and reforms in the short term and in the long term. and in many respects the deal negotiated with senate leaders by speaker boehner meets that standard. there are no tax increases in the bill. after adjustments to the bill today there will for certain, according to c.b.o., be dollar for dollar cuts for any increase in the debt ceiling. also there are spending caps, a commission, and the possibility of long-term eitlement reform. all of this commends the boehner plan as an important first step towards fiscal discipline and reform. you'll also recall at some point vote for a balanced budget amendment to the constitution. it's my belief in the importance of that last element that brings me to the floor today.
i rise to urge all of my colleagues to keep an open mind on the boehner plan. but also to keep an open mind about bringing a balanced budget amendment to the floor that could enjoy broad bipartisan support. . look, washington, d.c., is not only broke, it's broken. the american people have seen both political parties run up deficits and debt. both political parties live outside the means of the american people and they know in their heart of hearts that something is missing. i believe that's a balanced budget amendment to the constitution of the united states. now, i've authored the spending limit amendment to the constitution. i support the stout version of a balanced budget amendment that republicans marked up and rferenced in the cut, cap and balance bill, a spending limit
cap, a supermajority on tax increases. but i don't think it takes any great insight to know that that bill will likely get the 290 votes it needs to send it to the senate and send it to the ate. so in addition tvoting on that bill with spending constraints and others, i believe the time has come to bring the historic balanced budget amendment back to the floor of the congress. i believe there should be no incrse in the debt ceili nless this congress does everythingn its power to send a balanced budget amendment to the senate and to the states for ratification. and i believe we have that moment. i've talked to some of the most prominent members of the democrat minority in this congress today, and they've expressed support for this amendment. the american people overwhelmingly support a balanced budget amendment to the constitution.
and so i urge my colleagues to keep an open mind. keep an open mind to the boehner plan. i'm continuing to study it and seeing if we can embrace it as an importa first step on fiscal discipline and reform, finding a way to pay the nation's bills to change our fiscal direction. but i alsoncourage my colleagues to consider at some point in the near future, let us bring to this floor a balanced budget amendment that could eny broad bipartisan support, to know we can not only make progress for fiscal discipline and reform but we can make history by restoring to the national charter or placing in the national charter those restraints on spending that this nation's >> white house spokesman discussed the president of the position on the debt ceiling and the speaker's proposal at a press briefing.
this part of the briefing is 15 minutes. >> thank you all for being here, good afternoon and welcome to the white house. the white house. ok, and with that. i have a quick announcement to make at the top. on friday, the president will hold an event at the walter e. washington convention center to announce a the next round of a coordinated national program to improve fuel efficiency for cars and light duty trucks for model years 2017-2025. this program that builds on the
historic agreement achieved by the administration will result in significant cost savings for consumers at the pump, and dramatically reduce oil consumption, cut pollution, and create jobs. that is on friday. we will all look forward to some other kind of news story to cover. separately, i want to say that we are obviously paying a lot of attention. i know you are, we are clearly, the process ongoing that must result in some sort of compromise so that we do not, for the first time in our history, lose our borrowing authority and risk of default. the president made clear that the way to do that is to reach a compromise. he still firmly believe that compromise is essential and possible. i would note that when we look at the various pieces of legislation, whether or not they
are vehicles for compromise, it is worth noting that the speaker of the house earlier today in pitching his plan made the point on the radio that in his words, barack obama hates it, nancy pelosi hates it, harry reid hates it. i don't think there is much to add to that if you're trying to make the case that this is something that we can come together around. this is something that represents a fair compromise between democrats and republicans, it doesn't really hold up. we believe that there is a place to find compromise. the president has made clear that he believes this has been an opportunity to do something big and historic that requires political will by democrats and republicans. he willingness to take heat from your base as opposed to placate your base. the requires a will on both
sides. with that, i will take your questions. >> we are 24 hours to a potential calamity here, is the white house any closer to a strategy? >> congress needs to take action. we have been intensely engaged in negotiations and conversations and proposals and counterproposals at a variety of different levels. the talks led by the vice- president. the private conversations and negotiations with the speaker of the house. we have continued ever since the speaker of the house walk away from the compromise last friday, we have continued to have conversations at all levels where the democrats, republicans, friends and staffers. for a solution to this problem that is balanced and fair.
we continue to this day and this hour to do just that. one of the problems we face here is the last week, while we were engaged -- while the president was engaged in trying to reach a bipartisan compromise, we were told that the house had to go through the motions, the ritual of debating and voting on a measure that everyone knew from the start would never become law. that 8 out one week. we are doing it again. the speaker's words themselves make clear that they are working on a measure in the house that there is even a pretense of an attempt to create something that would get a bipartisan compromise. time is running out. and we need to come together now. it is only a matter of days before the august 2 deadline. and at midnight on august 2, we don't turn into pumpkins, we
lose our borrowing authority for the first time in our history. and that would be a very bad thing. >> he said the president would only sign a short-term extension if it is to let a bigger bill working its way through? is that still the president's stance? when he be willing to do a 30- day extension? >> there is nothing that i have said in the past that i would change now. if for, for a couple of days, we had an agreement to get something done, that potential remains. beyond that, an extension only adds to the great uncertainty that is already having an impact on markets and the economy. if only cast further doubt around the globe and around the
country on whether or not washington can get its act together. the greatest country in the world, the strongest economy in the world. the rock-solid a haven for investors can function. there is plenty of time to get this done. what is lacking is a time. we all know the details. we have all become experts in what adds a of to the necessary amount of deficit reduction, and the random association that was established a while back between dollar for dollar deficit reduction or spending cuts, rather hot. rather hot. an increase in the debt ceiling, we know how we get there. what is required now is political will. and there is time, if people are willing to find it can use it, it is time to take action.
>> they have enough cash on hand to take it through august 10 or 15. can you respond to that and tell us what would happen if the deadline remains in place? >> here is what is important to know. we began this process with a letter from the secretary of the treasury in january identifying with great precision when we would hit the debt limit. we did. may 16. the treasury secretary has been able to take extraordinary measures in order to extend the time before we run out of borrowing authority. that deadline is hard and fast. there is no escaping back. people are looking for of france, but they don't exist.
what i have said and what everyone has said is when we lose the borrowing authority, we become at risk of default on our obligations. does the united states continue to take in money? of course it does. but to have the capacity to borrow money, every 60 cents we take in his 40 cents short of the dollar we need to pay out. you create a situation. movie analogies are popular. you have a situation where you have real people who suffer. whether you have a car loan, mortgage, student loans, credit card. interest rates go up. in addition to that, among the many obligations we have, had 80 million checks issues payments every month of the $1.2 billion of payments.
this does not include social security payments, disability payments. they include the bills to contractors that do work with of the government. people that manufacture the ammunition that we sent to the troops in afghanistan. the choice will have to be made. what he say? who'd you pay? that is an impossible situation this country has never faced and should never faced if congress does what it is elected to do. >> messages from brokerages and investors say that even if the fault is avoided, a downgrade is likely? could you speak to a downgrade? could you speak to a downgrade? >> of the rating agencies, they make their decision. a downgrade is a bad thing, the
fault is catastrophic. the focus we have to have is on the necessity of reaching an agreement that can pass the both houses and be signed into law. it will extend the borrowing capacity to pay the bills will already run up for a substantial time so that we don't have this cycle. there is one measure right now, one notion out associated with one of the measures that would have us doing this again around christmas time. does anybody think that is a good idea? what kind of impact would that have on the economy? one of the most important seasons. let's throw into doubt whether not -- >> [inaudible] >> a downgrade is very serious.
congress can establish that we have raised the debt ceiling. we have the highest rating available for 100 years and we should maintain that if we do the responsible thing. please do not get the wrong impression. i am saying that if we take the action that we are able to take, if congress acts accordingly, we can take care of all of this. there is time to do that. [inaudible] i think i go to you. >> what is your response to predict that said that the president claims to save more money than he actually does? it is money that would never have actually been spent anyway? >> there are a couple points today. first of all, the savings
gleaned by winding down the borders and afghanistan -- te borders and afghanistan -- te war -- the wars in afghanistan, social e -- to slash security benefits or education spending. you would then count that as a savings. paul ryan, when he submitted his budget -- this is the result. any policy decision you make is a choice of how much money to spend, and that is what these decisions are. are we going to save $1 trillion because of the policy decisions of this president? i would say yes, and i encourage you to write and talk about it. they are good decisions for fiscal health.
they are legitimate. they're part of any serious they're part of any serious bipartisan compromise . we have identified, in great detail, significant spending cuts in domestic spending cuts. extraordinarily difficult savings and entitlement programs that we would be willing, the president would be willing to make a case to his own party in the name of accomplishing something very big. it would fix this problem for a long time and put us on sound economic footing in the twenty first century. that is what leaders do. daily. they don't cater to their base. it is politics come out there are a lot of politics in washington. that is how it is and how it should be.
but there are times when you have to make hard choices and you say, you know what? i will suffer some losses here. i want to bring my whole party with me. but i have to do this because the country requires it. >> of the house financial services committee held a hearing today to look at howin , several heads of those agencies talked about federal spending, the potential for a u.s. default, and the chances for a downgrade in the u.s. aaa downgrade. this is one half hour. >> that debt limit.
can you comment on the president's position where his solution to the problem as to whether we will still get a downgrade? >> congressman, the way they looked at it is they look at five variables. commercial debt. they look at the fiscal aspects, and the amount of the monetary. they look at the economics of the country, the liquidity and funding, and, of course, the political institutions. >> i do not have so much time. one of the points of analysis is what structural changes that the congress is going to pass, so were you able to look at what was presented and be able to give an opinion on that? >> there has to be a credible plan to reduce the debt burden it, reduce the deficit levels. >> i understand. i serve on the budget committee,
and now, there is the infamous statement from the cbo that says, "we do not of alleyway speeches." whether their plan is credible? >> congressman, there have been a number of times this has been announced by the administration. >> have you been able to take a look at them? >> the debt burden, a deficit levels, within the threshold of a aaa rating, and so we have analyze that, but we are waiting to see what the proposal is for the sovereign analysts to analyze it more thoroughly. >> so the story is, or at least one of the stories, with regard to the reid plan, it would be better to make sure we do not get a downgrade according to some of the agencies. is that story true? i say that partially related to
your own analysis of july 14 which says that what we need to have an order to avoid a downgrade is a $4 trillion structural change. as far as i know, the reid plan does not reach that level. >> we do not comment on any specific plan or political choices or policy choices being made. we are just commenting on what is the level of debt burden, what is the level of that for the aaa. the number that was put forward, commenting on those proposals, that that would bring the threshold within the range of what a aaa rated sovereign debt would require. >> firstly, it is something under that, a potential? still be able to maintain a aaa rating? >> i would leave that to our analysts to determine that, and it is a decision that is made by the ratings committee and by our
sovereign analysts. we have a clear criteria s that we have published. we have threshold's but better out in the public domain. >> the ried -- reid plan is under that. but we have seen these other potential plans, and you have not produced any other documents in that regard. is that correct? >> no, we have not. >> do you want to chime in on that, moody's? thetx -- moody's has placed rating of the u.s. under review for possible downgrade. one is the short-term risk of destruction, and two is the level of debt in relation to the overall economy. >> right.
and i know you are not the analyst, so do the plans that we have seen either from the white house, which i have not seen anything on paper, or the reid, which is more specific, do they satisfy those criteria? >> to my knowledge, moody's has not published any thing in regard to specific policy issues or parameters that the committee will consider for review. >> do you want to chime in? >> i do not think rating agencies have the wherewithal, the intellectual range, the experience.to be doing ratings on sovereign's -- the experience to be doing ratings on sovereigns around the world.
what we have seen is a constant activity of being a day late and a dollar short, and running around in front of the parade. what makes these organizations? we are not qualified to do this. we are too small, but i question conceptually whether private enterprise should be in this business for pay. >> i think you. >> i thank the gentleman, and now the gentleman from texas but. >> mr. sherman, do you believe the amount of debt poses a systemic risk to our economy? >> our sovereign analysts have highlighted that the debt burden and the group of the debt burdens is something that does need to be addressed for us to
continue to assess the credit worthiness of the sovereign commercial debt at aaa levels. >> in the political discourse that we are seeing today, do you think that it is the job of credit agencies to get involved in trying to make a decision one way or another on a political basis? do you think that is interference on the part of the credit rating agencies to be stepping in at this stage and making an assessment? >> sovereign debt is a large asset class that many investors around the world invest in, and our role is to really provide an independent view and a future, forward-looking view for investors as to what the risk levels are for those assets that are being invested, and that is what we are doing. we are really for the benefit of investors giving them in perspective and point of view of what do we believe are the risks arising for any sovereign,
whether it is here or europe or anywhere else. we are doing the same thing that we do in any part of the world, speaking to the risk that the investors invest in, and this is a large investor class, and they are the ones to determine what to pay for those risks. >> do you honestly believe that the united states can default on the debt? >> our analysts do not believe so. by the way, changing the rating does not mean that they will. there is a very low probability of default. that is all that aaa rating means. if you change the rating, all that means is that the risk level has gone up. it does not mean that it will default. if we believed that, it would change to default status. >> thank you. mr. gellar, is there information to which moody's and s&p have information -- access to that your firm cannot access? >> a significant amount,
actually. in addition, there is a lot of information that they have that ratingso's with bond cannot access. i think it is 17g5 that is the rule that created last year or late 2009 a late ability for products or data that is being used for a paid for rating to be shared n and accessed by shared nrso for an unsolicited rating. we do not have any access to that. what kroll would not necessarily have is access to things like the underlying data that goes into collateralized loan obligation, security. very, very close. they are not covered in the accept -- asset-backed securities, and the sec does not a purview over the loans
themselves, the underlying collateral, for those types of securities. there is a whole world of information that none of us have access to that really would open up the space to competition note, as well as providing the investor community information that they directly could use if that information was available to them. >> mr. kroll, would your answer be the same, or would it be different? >> .as an nrso, which is one of the reasons we became an nrso, we have access to a lot of information. we have just in the last 30 days braden 3, and in two weeks, it will be five commercial mortgage-backed deals. we are privy to the same information that the oligopoly gets if they are on those deals. >> ok, pas were you disappointed
or pleased with the provisions of dodd-frank, related to the credit rating agencies? >> i think by and large, and is disappointed with them. i think the idea behind dodd- frank and my understanding was the rating agencies would be to create transparency, create accountability, increase competition. in fact, i think what happened was a lot of punitive, directive initiatives toward the big three with unintended consequences that her to the variety of us who would consider being nrso's or those who are already nrso's. competition is what is going to seawall bid, and i really do not think that dodd-frank contributes to that mission. -- competition is what is going to vote increase it. -- going to increase it.
there is still a large number of institutional investors that are paying attention paying votethe nrso's before they will pay attention to a non nrso, although it may be evolving but continues to support them. for us, we do not mind the hard work. we are in this for a long term, and we are in this to grow our business, and doing the hard work and explaining our ratings to a variety of potential and current users is very much a part of what we do, but we are trying this example of the quarterly ratings affirmation. we believe even as a non-nrso that we are leading the field, and we are going to do that. we are prepared to compete, but it is harder with different folks, given the entrenchment. >> i see that i am out of time. thank you very much. >> consultation with the rating
member, we are going to provide members another round of questions, and so, i will start that. mr. sharma, have you had conversations bout the us sovereign debt? in our case, the treasury is the organization for us. we meet them regularly, and sometimes quarterly, when we have new, updated information. our sovereignty and has been meeting and discussing and
dialoguing with the treasury as well as with other parts of the administration and some members of congress to understand what the situation is, what the policies are being formulated, how credible they would be if put into play, so we would have a regular, ongoing dialogue in order to get a better understanding. >> my question, but have you and senator geithner had a conversation about the rating of about the u.s. sovereign debt? >> no, chairman, i have not had any direct conversation. >> and so, i know that the sovereign debt thing is not a u.s. issue, but it is a global issue, but jiverly in the european union, and the european central bank. have those entities been having an ongoing dialogue in how oat you might be reading their debt to? in the same respect? >> congressman, are sovereign
analysts meet with the central banks, treasuries, and other policymakers around the world on a regular basis. we read about 126 countries, and we have 100 analysts in --ereign's -- sovereign note sovereigns. this is just an exchange of views, but not on their ratings per se. >> and so, here is a question. what about countries that can monetize their own debt, like the u.s. and some of the other countries? would a country that can print money get a higher credit rating than a country that does not have that ability available to it? >> chairman, yes. in our criteria, we specifically say that countries can have their own currency, and in this case, the u.s. is a global
reserve currency, so it does get a lift. i am not sure exactly how much lift, but, yes, they do get a lift. >> it would be interesting for me and maybe for some of the members to know what the left is. >> i think we publish it, and i will make an effort to get it to you. >> when you are looking at the potential of what a reading is, a rating is the potential of what you think the risk of default is. what percentage of a country's government expenditures attributed to interest would begin to cause you to enhance the potential for defaults? in other words, some countries, their interest is 5%, 10%. some countries 25%. at some point in time, squeezing out the amount of government expenditures and forcing either
additional taxes -- but with the interest carry be a factor of it? >> it is. that servicing is an important factor, as is the total debt level, as is the deficit, as is the economic growth prospects, because they all influence the trajectory of the growth of the debt to levels for the country. .clearly, we have threshold's in each rating category against many indicators that we look at. at this point in time, it is the aaa for the debt servicing it. we can look and see if it is in there and send it to you. >> .the last point, a country that the debt levels are increasing. in other words, the interest kerry is increasing at a faster level than the gdp -- the
interest carry, what is the pathway for that country? >> it is a function of., and it is a function of the total debt level. it is a function of the deficit. it is a function of the economic growth, and then, what steps are going to be taken to address all of these things, so you can change the trajectory, and as you mentioned, the dollar as a global reserve currency also applies to the creditworthiness. >> would you say this is a fair assumption, that the comments you made recently about the u.s. was not whether we were going to default or not but whether we are going to actually address the massive deficits that this country is running? >> chairman, that is it. the important issue is really the long-term growth rate of the debt, the debt burden, the deficit. that is the most important issue at hand.
to your point, that is the more important issue. >> thank you. my time has expired. raking member? >> banks, mr. chairman. i just wanted to point out that i have the bloomberg news report on the second circuit venue. it deals with underwriters. apparently moody's and standard and poor's were suing u.s. underwriters. i cannot imagine them suing u.s. underwriters. you are in the business of making thoughtful opinions, not underwriting. i am glad you won the case. i would not want to get into this mess, but that has something to do with other cases that may come. i wanted to pursue another area. .-- a muni-type of bond. are you in that category? >> as far as an issue where? >> yes. >> no, sir. >> ok, so you do not get tax- exempt status?
>> no, requires assets that pays benefits. we are not a part of the state. we are an arm of the state but not part of the state when it comes to issuing debt. >> ok, guys, i have been trading leaps -- chasing the credit rating agencies for years, because i am a former mayor, and i was kind of giving you a little taste of what i got from my nine years as mayor. i did not like it. as mr. said earlier, i had to jump through hoops to get ratings below what i deserved, and when i got here, i realized i did get ratings below what i deserved, because my wrist for default, which was the only basis i thought anybody worked, was significantly in a different standing. dodd-frank was supposed to address some of these things, and i would like to address whether or not it has. in the last couple of years, i have the numbers before me, up until 2008. i have not updated them.
but until 2008, the historic rating of all rating categories, aaa to non investment grade, by moody's standards, 97% times less likely to default than corporate bonds, yet were rated lower. by s&p standards, they were 45 times less likely to default, yet it is rated lower. have you changed your ways? our you know rating municipal and other governmental agencies as if they were corporations? again, based on one thing and only one thing, which is the risk of default? mr. sharma? >> a breaking member, we have always had one consistent skill we have tried to adopt across all of our asset classes, and as a result, our municipal ratings are generally higher than the corporates, of course, and other types of institutions.
-- ranking member, we have always had one consistent strategy. it is copper ability across all asset classes. >> the reason i ask is because in 2008, again, not updated, and i know it has changed a little bit, but my guess is, let me ask you a basic question. are you aware of movies defaulting at a higher rate than corporate bonds? >> i do not have that exactly. as i mentioned, we are aiming to give comparable with the in ratings across all asset classes. >> that would mean you would now star rating what was once waited in 2008 as a beat -- once rated in 200 a bba to something else,
and i would argue that since default rates are the only thing that matters in a final analysis, again, because the only thing that matters is the likelihood of getting repaid, and and then that should be based on historical data, and unique -- munis should be rated aaa. so you're telling me that you have addressed that issue and that these new needs -- these munis are being rated like the other? >> we are not be calibrating the criteria on municipals with the aim and objective to sort of have comparable witty of ratings across all sectors, across all asset classes and geography. this is forward-looking. made progress in this? >> yes, since 2008, moody's has formally we calibrated all of
the finance ratings to move them onto a scale that is comparable to the corporate ratings of financial institutions. >> based on default rates? >> there was research based on a lot of analysis around that calibration that i can assure is provided to you. >> my staff will be in touch with both of you to try to catch up on some of the data. back to you? i do not know if you do or not. >> i do not. i am not sure about the data you are referring to. a lot of these were insured, so deftly have a skewing of default status, and statistics and rating. >> .these are based on not insured. i believed then that an u.d. boat -- that munis were -- that they did not meet. mr. kroll, do you do munis? >> yes, we do do them.
we are just starting. we are taking the 200 most liquid, some involving states, some involving cities, and we are looking at the actual financial, so we will not be using dated information. sometimes it is one year or 1.5 years dated. so stay tuned for september. >> i am looking forward to it. and you all very much. i appreciate it. >> i thank the gentleman. mr. fitzpatrick. >> mr. chairman, i want to follow-up. in a letter to the subcommittee dated june 13, secretary geithner acknowledged that he, along with the deputy secretary, the omb director, and representative of the president's office met with personnel on april 13, an actual meeting. are you aware of what was discussed at that meeting? >> congressman, no, i am not. i know that they regularly meet
with them as part of the process of trying to get a better understanding, and they met with the treasury. i was not even aware that they met with the members that you just said, but i know they had a meeting. they met with them. because i am not privy -- i do not have privy to the people they meet in the ratings process. >> according to documents obtained by this committee, two days after that meeting, on april 15, a man reached out to the secretary to let them know the committee outcome. do you know what was discussed on that call? >> no, congressman, i do not. normally, the process would be, once the ratings committee makes a decision, wheelwright up the decision. we also inform the issuer of the trading action -- rating action if there was a change, and if there is any publication that we are going to do, we do share with them also.
>> so you would have informed the issuer before the public would have found out? >> we would let them know that we would be taking a reading action, yes. >> certainly after that, treasury reached out to someone from s&p to draft a press release on the outlook change. this was three days before the actual press release occurred. what would be the purpose of sharing a draft press release with the issue were? >> it is to give the issue were a chance if there are any factual errors or anything else in the press release, then there is an opportunity to correct that so that we give the public a completely in error free information. and so that is the opportunity for them. >> and that is standard practice? >> standard operating process. >> do you know if the department made any substantive changes to the press release? >> congressman, i do not know. >> the next day, two days before the release, another official
reached out to john chambers and asked if there is a communications director that they could connect with, and it appears that a call option did take place. do you know what happened on that call, what may have been discussed of >> i do not know specifically, but, generally, they may have wanted to coordinate as to when we would be releasing our information so they could play in their own release of information and if they had intended to do so, and that is a normal process that the corporations that read rate, if we announce an action that they believe it is material, then they may want to coordinate with their own communications group as to what they may want to say to the public along the timelines. >> but you do not know what occurred on the telephone call? and you do not know whether or not treasury asked for any substantive changes to the draft press release in the days before it was issued? >> the purpose of sharing the draft release is only if there is a factual error. once the rating committee
decision is made, we proceed. >> and you believe that is inappropriate process? >> we believe that is an appropriate process because it allows for the elimination of any errors that may occur for any other reason, but once the rating action is done, we follow the process, and it is followed very rigorously. >> mr. chairman, i would just ask that the secretary's letter dated june 13 and the attachments be made part of the hearing record. >> without objection, so ordered. >> with the gentleman yield? >> yes. >> mr. sharma, again, i want to be clear. as a former mayor, i get phone calls. everything you do. is that a fair statement? every rating you do, you give the individual that is being raided an opportunity correct factual issues? >> yes. >> mr. rowen, a leisure company
do the same thing? >> we do that to make sure there is not a material misstatement of fact. >> again, you do not do public stuff, but do you do something similar? >> we have absolutely no contact with the issuers at all. >> because you do not make public statements of any kind of >> that is correct. >> sir? >> on the issue resides of our business, because we also have a subscription business, on the issue were paid, we have just done our five transactions. .-- on the issue were -- issuer paid. >> so it is a standard practice? >> yes. >> time. >> well, i want to think this panel. this has been a very good hearing, and we appreciate your time and your thoughtful testimony, and we just want to remind that the members have additional questions for this panel, which they wish to submit
in writing, the record will remain open for 30 days for members to submit written questions to these witnesses and place their responses into the record. if there is no further business, this hearing is adjourned. >> thank you, mr. chairman. .[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
>> on tomorrow's "washington journal," an update on the debt limit negotiations with congresswoman blackburn. and bill pascrell. also, a potential of the u.s. debt downgrading. "washington journal" begins live at 7:00 a.m. eastern on c-span. >> this weekend on booktv on c- span2, from the libertarian freedom fest, matching leaders to their counterparts. several oat authors. also, on it "afterards, -- afterwards," the triple agent. also, how a teddy roosevelt lead was shaped as a rancher. look for the booktv schedule.
you are watching c-span, bringing you politics and public affairs. every morning is "washington journal," connecting with elected officials, policymakers, and journalists. weekdays, watch the house and during the ninth congressional hearings. also, supreme court or arguments. on the weekend, you can see our signature interview programs. on saturday, "the communicators," and on sunday, "q&a" and "prime minister's questions." you can also watch anytime at c- span.org, and it is odd searchable at our c-span video library. c-span, a public service, created by american cable companies. >> the house rules committee approved roles tonight for a new deficit-reduction bill, making way for a debate on it in the house tomorrow. this bill includes 917 billion
of budget cuts over the next 10 years and increases the debt ceiling by $900 billion. this committee is chaired by the california republican. this is 45 minutes. [gavel] the rules committee will come to order. >> 30 minutes equally divided and controlled by the ranking minority member on the ways and means, and 30 minutes equally divided between the chairman ranking and minority member. the bill provides this accompanying the resolution
modified by the amendment printed in part b of the report shall be considered as adopted. the bill as amended should be considered. it provides one motion to recommit with or without instruction. instructions, if further have to suspend the rules at any time through sunday july 31, 2011, if the measure was made available on the previous legislative day. it provides to of hours of debate on the motions to disband the was related to the balanced budget amendment to the constitution. it sets the date for the convening of the house or the formal sessions during the period from august 1, 2011, through august 6, 2011, and provides that the speaker may dispense a legislative business for these proformance sessions and to clear the house adjourned to a time on the next proformance session date. the world provides for the pro
forma sessions from august 1, 2 dass 11, through september 6, 2011. it provides the days through september 6, 2 with us 11, shall not constitute a calendar date for the purposes of the war powers resolution. finally, it provides that the speaker may delay the referral of introduced measures from august 1, 2 with us 11, through september 6, 2011. >> you have heard the motion from the gentleman from dallas. as you know, very well last night, when we recessed, we had just received, as was pointed out in the hearing, a letter from the congressional budget office, which concerns. the world that we have tonight provides for consideration of the house amendment -- notethe r -- the rule that we have. we are dealing with such extraordinary direct circumstances.
by which time we need to increase the debt ceiling approaching. we want there to be an opportunity for expedition consideration in the senate, so that is the reason we are using the structure we are right now. the amendment we made available monday evening will be further modified by the advised -- revised amendment which as been on the website. there were scoring issues that were raised. it creates a new point of order against spending caps and makes a few other technical changes. that amendment was made available to the minority and posted on our website this evening at 5:50, and even though it is close, they will still allow an amendment in the form of a motion to recommit. it also provides for consideration measures under suspension of the rules, as mr. sessions said, through the weekend, although nothing may be brought up under suspension unless the text has been available for one day prior. there was a lot of discussion
here yesterday about the balanced budget amendment, and i would say that we fully expect the balanced budget amendment that we posted on our website to be debated. there are other alternatives under the same process, as well. and we do in this provide an extension of the debate time for the possibility of a balanced budget amendment being considered under the suspension of the rules. the suspensions that will be considered will be made available by the majority leader, and as mr. sessions said at the end of his motion, recognizing that we're not going to be able to pass a resolution. we, in fact, to provide for the structure that will be necessary for the house to continue in session through the month of august. any discussion? >> i would like to propose an
amendment to the rule was. i move that the committee grant at 6:27 and open world so that all members can have an opportunity. this is the most important legislative event taking place here, which also perhaps include a balanced budget amendment, he changed the constitution of the united states, and i would like as ought to be able to provide an amendment to this legislation. >> well, you never heard the motion. let me just say, if i can respond, let me just say that this rule allows for the consideration of measures under the suspension of the rules. this does not deal with the balanced budget amendment. the only thing it does is to extend the debate time, if there is a debate. this is the more members will have an opportunity to participate, and we do know that we are dealing with time constraints here. as, i think, anyone who has been following this is well aware, it
is important that we move as quickly as possible. we do want to assure that there will be adequate debate time on the house floor. i am going to encourage my colleagues to oppose the notion of taking this bill with our amendment and having it considered under an open member process. sir? >> thank you. again, given that this bill has not been through any legislative committee or adopted at any hearings, i think an open rule should be made in order, and i would therefore be supporting that. i also want to inquire again, we briefly discussed yesterday who was the sponsor of the bill, and i thank the chairman claimed the bill. i ask the same thing of the amendment. i would like to acquire -- inquire again as to who was the sponsor of this amendment to the bill. >> the world's committee is putting this in place. this is something that is done
by tradition by both political parties -- the rules committee is putting this in place. >> are you saying there is no member? >> this is being done by the rules committee. you are welcome to characterize it in any way you want. >> oh this is a dreier ammendment to the dreier bgill -- bill. i hope he will also afford us the opportunity. we have some students from princeton university who are doing internships on the hill, my alma mater, and across different parts of our federal government, and they are observing the sausage making process and learning about it. i will yield to the gentleman from massachusetts. >> they give for yielding.
i guess my question is -- my >> can i welcome the students from princeton? >> let me just thank my friend, and my grandfather was a princeton alumnus, and i know there is a wonderful tradition there. it is a wonderful institution. i have had the opportunity to visit, and including mr. polis, many great friends who are alumni of princeton university, so welcome. i hope you all have your internship year, and i guess now that i have gone through all of that, i get to hear from mr. mcgovern. [applause] >> and one of them is in turning it in the office of a former -- is in turn -- interning at the abbas of a former -- at the office of a former rules
committee member. >> i will remind you that senator leahy is the author of this bill. senator leahy is the author. >> again, my time briefly, the senator cannot be the author of a house bill. >> this happens not to be a house bill. >> i believe that there is something regarding the freeing of information act -- freedom of information act. having briefly look at this bill, and i know we have to pass a bill to know what is in it, but i am fairly confident in saying that there is no freedom of information act process these in this bill currently. >> the lady bill cook >> the lady bill. -- the leahy bill? >> the leahy bill.
the dreier amendment to vote -- to thedreier bill. >> i am not quite sure what this means. i know that the chairman said that it was getting numbers in sync with the cbo and where the speaker wants this bill to go, but i guess my question is what does this mean for social security were for medicare or for pell grant or for roads and bridges or student loans or any of these things. last night, the chairman of the budget committee note was not made available, so we had a tough time trying to answer and finding the true human cost of what we are doing, but this amendment is billions of dollars a excited here.
billions of dollars must impact somebody. maybe the chairman of the committee can tell us pick what is impacted by this amendment to the bill? >> in my time, i would be happy to yield to the chair in order to answer that. we do in fact have to pass this bill to know what is in it, or made the chairman can inform us as to how this bill affects social security and medicare and the questions the gentleman has. >> as you know, last night, but -- last night, a proposal was put forth that had been scored by the congressional budget office, and we noticed there was a discrepancy. this ends up being $970 billion in savings as opposed to the $1.20 trillion in savings that had been anticipated, and the had been anticipated, and the language that is provided here addresses that issue, and i will say that as far as a negative
impact on social security or medicare, there is no negative impact of these programs. --fact, when it comes to pel pell grants, there and of being an increase the level of support for the pell grant program, but at the same time, we do have an opportunity to see a significant savings, so this measure, there are a number of technical changes that we can get into that, frankly, i suspect can be discussed and know that our staff direction note -- director has been going through this process, so we want this resolved. i will say that the notion of saying what you're characterizing this and using the pelosi model of passing it before you know what is in it, i think we have something called
the three-day layover requirement, that we are doing our doggone note -- doggonest. i think the german for yielding. >> i think there is some question about the size of the, and this is perhaps the dreier amendment to the note -- the dreier bill. i do not know what it is. i will be happy to yield to the gentleman from massachusetts. >> again, and i do not mean to be a pest. i am just trying to figure out. billions and billions of dollars being cut. it must impact something.
no? something has to be adversely impacted. maybe it is then to do not like, but i would just like to know, is it social security, is a pell grant -- is it pell grants, community block grants? >> i would be happy to yield to the chair. >> would there be at some time where you allow me to recognize myself? >> you can put it in the comments. >> i will seize the opportunity. >> i will encourage the chair to also answer mr. mcgovern's question as to what is being cut. there are many cuts that my colleagues from massachusetts and i agree on, including reducing these unnecessary wars and bringing some of our troops home. again, it does not make explicit mention, but we are in a situation where we have to pass a bill to know what is in it.
are we cutting social security? are we cutting food stamps? are we increasing pell grants, as the chair said? there is great uncertainty in this body dot with regard to the last-minute trillion dollar bill that does not have a single hearing or a single mark up. to be brought forth to the house under a proposed closed rule. the slaughter amendment, which i support, and i call on my colleagues to support it. a trillion dollar bill that will cut something that the judgment from massachusetts is try to figure out what it would cut, as do i, and i would encourage that it be done because there is a deadline or at least an open process, while others, press myself and others offer amendments just as the chair has offered the dreier amendment.
we would like to have the privilege of being able to offer amendments to this bill. the slaughter amendment. i will yield back. the gentleman from massachusetts and the question. >> there are a number of things that i would like to go through in response. first, we are in here because by august 2, at the request of the president of the united states, we want to increase the debt ceiling, and over the past several weeks and months, there have been discussions that have taken place, i am not want to get into characterizing any of them one way or another, who was where, but we are where we are right now, and i think that democrats and republicans alike, we recognize that august 2 is approaching, and there is an imperative that we take action. now, i have been through countless increases in the debt countless increases in the debt ceiling in the three decades
that i have been privileged to serve your, and we have seen increases in the debt ceiling take place many years before that. never before in the history of the republic have we seen a debt ceiling vote take place which actually is focused on getting at the root cause of why it is that the debt ceiling needs to be increased, and that is bringing about a reduction in spending. this measure has broad guidelines. without the kind of specificity that my friend has raised concerned about, but let me talk about a couple of items that were raised in the joe biden talks that took place, and there was agreement on a number of areas of spending reductions, and, frankly, talking with the ranking member of the agriculture committee, a former chairman of the agriculture committee, this was something pit that he explain to me how it came about. he talked about the food stamp program compaq and one of the
things that was discovered, and there was a bipartisan consensus to deal with this issue, in the biden talks, is that if one simply qualifies for the low- income feeding assistance program, and there is a program very near and dear to my friend from worcester and to me and my friend from rochester, as well into lots, but if some qualifies, the automatic qualify for food stamps. well, it seems to me that there should be -- they automatically qualify for food stamps. maybe they are deserving of food stamps, but collin peterson and others, and this was something that was agreed to in the biden that was agreed to in the biden talks, et -- talks, if someone simply goes in for a 30-minute counseling under the program, they automatically qualify for
food stamps. well, again, maybe that person is deserving of food stamps. maybe they are necessary, but the notion of saying there is an automatic granting of food stamps for someone who simply receives counseling under the tanner program or the other program is just an example. now, i am not saying that in this measure that kind of specificity exists. we have the broad guidelines that were put forward and a level of spending that has been frankly agreed to in a number of areas from the biden talks. some with the president. somewhat senator harry reid. and those are going to be targets and goals that we will put four wrote -- forward with some mechanisms that will ensure the enforcement mechanisms to guarantee that we do, in fact, proceed with the actual spending reductions that i believe are going to be necessary if we're
going to be able to maintain our credit rating as a nation note and the global economy be as successful as we are today, and i hope will be in the future. i know my friend is a very strong proponent of our global leadership role, and we have spent a great deal of time talking about that, and i am hoping that we will be able to be successful, and i am happy to yield. >> again, we are not going to give any specific answers here, but i do not want this hearing to go on with anyone under the impression that somehow this massive fraud, waste, and abuse in the program -- getting at large numbers that should not be. >> i was just quoting but -- quoting the ranking member of the agriculture -- he was the chairman of the agriculture committee.
>> we can also say that geo did an audit. -- geo did an audit -- gao. a big portion of this, i guess this goes to the point. one of the things i relief frightened about what we are doing now is that the cuts are doing now is that the cuts are going to be disproportionately at poor people and the vulnerable and senior citizens. >> i also made it very clear that people who are truly in need should qualify and receive the benefits of food stamps. what i said if there were two instances. one was relating to one program, the other to the tanner program.
these are things i believe in a bipartisan way we can work to address to assure that those people about whom my friend and i and all of us are concerned will actually get the benefits that are necessary, and we will not have the kinds of problems that both democrats and republicans alike have acknowledged exist with both programs as relates to food stamps. i am going to urge my colleagues to oppose the amendment of my friend from rochester, and those in favor of the slaughter and mehmet will say aye, those opposed will say no -- in favor of the slaughter amendment. of the slaughter amendment. unless we are passing out a rule, then the ayes have it. the clerk wit -- will total.
i was rushing ahead. >> [reading roll] mr. webster. mr. webster boats know. -- votes no. mr. hastings. mr. hastings boats know. votes no. mr. chairman. mr. chairman votes no. >> are there further amendments? >> mr. chairman, a move to change the vision that gives one day's notice for suspension bills so that any amendment in the united states constitution being considered under suspension, the joint resolution will be available. i would like a moment to be able to speak on it. >> proceed.
>> when we began this new congress, we talked about 72 hours, the speaker talked about it. legislation. and then that got interpreted as three days, which does not have to be 72 hours, and now we are being told one day, and we do not know if that is 24 hours or 12 hours or what constitutes one day by the definition, and we are talking about something, a vote on a constitutional amendment is not absolutely necessary. it is not necessary at all to avert this debt ceiling crisis. it can happen note, three days after you decide to introduce it, but amending the constitution, and a balanced budget amendment to the
constitution has been considered constitution has been considered in the house on five occasions. the last time democrats brought up was 1994. there were 11 hours of debate and five alternatives in addition to the base tax. in addition, republicans brought up in 1995. they allowed nine hours of debate and six substitutes. this allows the house to consider a balanced budget amendment that no one has ever seen, and i think if i am interpreting the comments right, it is not one balanced budget amendment. it could be several of them. no one has seen it. we think it is the one printed on the rules committee. we are not sure. no debate or alternatives allowed and not even a motion to recommit, and i just want to say to my colleagues of the rules
committee, and a quote speaker john boehner, if i am lucky enough to be speaker, i will not bring a bill to the four that has not been posted online for at least 72 hours, and, you know, he did not say 72 hours unless of course it is a constitutional amendment or is considered under special rules. he said, "i will not bring a bill to the floor that has not been posted online for made a bl about reading the constitution on the house floor about telling as they hold the constitution in high regard. we're talking about amending the constitution, and not knowing what it is we will be voting on. we're going to have a debate for
a very short amount of time with no alternatives. the constitution deserves better than that. i help my colleagues will blow support my amendment. i mention this the other day. this is not something i support it. it hit him if he could assume -- i came to the conclusion they would not do without it. i have no idea what it is brought up under this bill. amending the constitution is a very serious thing to do. it is beyond passing a simple statute.
together to try to require congress to balance the budget each year. i think we could go even further pare i strongly support it can especially since we do not know how many amendments we are looking at. looking at. it is under both political parties. they come to the floor with literally one hour of notification nothing can pass this house under suspension of the row without a 2/3 majority. i think the arguments you are
making is a valid one. a good to encourage my colleagues to do it. >> i am encouraging my colleague spent any further discussion ?ha the an amendment it did in fact fail. congratulations. >> i do not have an amendment. i do wish to make a brief comment. in my opinion, we were in la la land. today we are in a gimmicky land.
this is a gimmick. thank you pl. >> i've always enjoyed our dialogue. to describe what happened yesterday -- la la >> thank you. i do not know how the house as long before i got a year. what happened yesterday was a bill that was scored by the congressional budget office using the january baseline. they were presented to us as scored by the nonpartisan scored by the nonpartisan budget office during .
it happened over and over again. this leadership team said no. slow down. we have an opportunity to do if the right way. to describe taking a step backward so we can do it the right way perhaps it is. this has been run in years past. i cannot be more proud as a freshman member of this body. we said this is serious. there is a right way and a wrong way to do it. >> i am deeply appreciative of the fact that you and i have had
extraordinary dialogue. there were some disagreements. i have been near 80 more years than have you. there are occasions where the majority has taken this. you cannot have it when you wanted. you do not have that when you need it. that is what has happened. i gather that we will continue to have that dialogue. this is an example where you like what you have seen. i have seen many examples. >> you are right. that is when i speak out picnic
that is not what has happened here. it does them a service to suggest that is what happened. it did not go back with the score that folks wanted. cages came back with the score that they got. we just got what we got. it went the other direction. i do not want anybody to take what has happened and say this is an example of what not to do. as someone that is new, and this is the example of what to do. i suspect this will go on despite their protests. i do not think that is what happens. >> my objection is?
you brought this before the rules committee. no one will tell me that this will be impacted. i think this is more than about a process. >> let me answer that question to pose it as if it is a to pose it as if it is a question, i am a regular order in this body. i reserve regular order. clearly, you have not read this. clearly, you have not read this. he would know good and well but
there's not a good social security net in this entire program. there is not a single reduction. 16 pages. >> i can direct it. >> i strongly disagree. i am reclaiming my time. that is why we put these things out there. i have the answer. let me tell them right now. if you want to know what the priorities are, you go back and look h atr1, the single most debate this institution has had. if you want to know where we want to go, go back and look at the april budget debates. it is about the resolution that
was brought to the floor. richet the priorities. i might have rather gone with a my way or the highway approach. i am sure i am right. i am sure other folks are wrong of laws that debate. it to this institution. some applications for the house and the senate. wouldn't that be neat? is it for? >> it is to conan. >> it is to conan. >> -- draconian . >> be mean they would have lied to both sides fear in >> is not
a step backward. >> i cannot be more proud. this is the right way to do it. i hope we do it this way again and again. >> of 3 free to pay its 39 m were the members of of this committee was going to make these recommendations. it was laid out. it lays it out of members of the joint committee. joint committee. negotiations to place in the white house. they may not have ever materialize anything written down. they did have discussions.
this will enable the proper designation of representatives of both bodies to empower them. of both bodies to empower them. >> be have to come up with a number. he has said you have to let someone figure of the cuts. if the city's programs methodically. maybe we need a bigger cut .aren i think it would have been better if the chairman had been here. i think if the gentlemen were
here, and he would have to say that he is not appoint a member. there is no way to understand who would be appointed. there are a process driven. this institution is addressing the needs of the nation. we cannot continue spending more than what we make. we spend more money on unemployment compensation than we are receiving revenue and by employers. when you have more money that is outgoing, money that is come in , that is a serious problem. clarence how many people will lose their jobs as a result of?
>> what i would tell you is this nation has lost 6 million net jobs. as a result of what believe our policy is a direct way related to president obama and this house. house. there was a delegate yuri of 09. i read the report that came from the joint committee. from the joint committee. i went to page 89 and talked about that. several members accuse me of trying to sabotage the bill. i said this talks about unemployment and debt that will rise substantially.
it was dismissed. it was unilaterally dismissed by members on the side. all i was doing was reading the report. we are not going to. it to be the process that overrides what might be a bad thing. >> having just passed the amendment, and now occurs on the people from dallas. people from dallas. booktv.or
aye. aye. aye. no. no. no. >> the motion is agreed to. thank you very much. thank you very much. everyone has good evening ken ? a lot depends on how it is exposed the. we will certainly keep them a form of the schedule. thank you. the committee stands adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]
>> now that the rules committee just past 14 speaker john maynard, it has been clear. there were no amendments allowed it requires a vote on a budget amendment. he begins at 10:00 a.m. eastern. coming up next, a corporate ceo is testified on the senate finance committee hearing about the effects of the tax code. we will hear from leaders about negotiations over raising the federal debt limit. >> tomorrow, an update on the negotiations. a look at the potential for a
downgrade in the u.s. bond rating. "washington journal" begins live at 7:00 a.m. eastern. confederate charleston of their on south carolina's secession. there of the week in, and discover more about the need history with plantation life and a catastrophic earthquake. charleston, south carolina. >> at this hearing of the senate finance committee, the ceos edge
of you are discussed lowering the tax code. walmart ceo also commented on the debt ceiling. he said it would be devastating to the customers and the economy. this is one hour and 40 minutes thinking ". >> the meeting will come to order. when men are employed, they are their best. too many men and women are unemployed. these are americans that want to work and will work again. our economy rests on the foundation of businesses big and small, providing goods and services.
it is not just growth for growth's sake. job creation cannot occur without this. american businesses faced obstacles. a economy is slowly recovering from the most of it again. they are saving more and spending less. major new players are emerging. in 1960, exports accounted for 3.6% of americans gdp.
for it to hamper the ability to create jobs. there is widespread economic growth. last year began their review of the tax system to figure how became so complex. they have looked at the answers. and whether it effectively meets those objectives. the tax code should raise the government. we also wanted to spur long-term economic growth. we wanted to promote fairness. americans need a tax cut that helps get them back to work.
today's witnesses can help us understand the effects. they represent some the largest players. we are looking forward to finding out what factors driving the decisions. we need to identify the policies that are most effective. do we need to support innovation more effectively? doing a more effective work for force?
i ask each witness to take off your hat to your company. tell us whether the experience as a ceo has taught you about what is best for our country. let's focus on how they can have it came jobs today. to ensurerking widespread prosperity. >> thank you. i like to welcome me to the meeting to continue the dialogue about tax reform. with so many of our americans out of work, it is refreshing to see them you employ over 1.6 million people. 1.6 million. that is pretty fed. this here to learn how affects your businesses.
it is the third revenue behind the individual tax. it is a percentage of total federal revenues the steadily declined since the 1940's. to much of the 1990's they averaged about a 11th term of federal revenues. last year, they were less than nine% of our total federal revenue. this generally considered to be the most inefficient of all taxes. they have debated for years as to who bears the board and rigid burden for the corporate tax. corporations and not always pay taxes. people do. which people? the most recent research seems to indicate that a substantial percentage as the form of lower
rages. i think it is important for this committee to focus on how it encourages the use of deaths rather than equity. if a corporation is in need of additional funds, our current tax system encourage them to borrow money rather than raising money by raising their stock. how is that? by making any interest-rate is deductible. any dividends paid and not deductible. the increased use of debt by corporations megacorporation more vulnerable to bankruptcy. dividends not being deductible means profits are taxed twice. as a result, we have seen a
decline in traditional corporations. in 1980, 750 of of business income was earned by traditional corporations. this was only 36%. 75% of 36%. this would eliminate distortions in at least four ways. the incentive first. to finance corporations rather than equity. the incentive to retain or distributed depending on their relationship of the corporation. it could avoid a reduce a second level of tax. we need to consider the issue of repatriation.
men and multinationals funded overseas. our corporate tax system discourages or penalizes u.s. multinational corporations including utah from repatriating a residual of u.s. tax at the time of repatriation. on large piles of cash. these same corporations are borrowing money. these corporations will be subject to a 35% cast back to the united states. they keep their cash off shore.
the key them to reform it. they adopted territorial tax system. our corporate tax system has the tax rate is usually about 39%. as a result, the u.s. has one of the highest corporate tax rates in the world. our tax rate is in need of reform, and the high corporate tax rate needs to be a major part of this discussion, and i am very interested in what our witnesses have to say with regard to our corporate tax system and how it affects hiring, businesses, and economic growth. again, chairman baucus, thank you.
>> thank you, senator. i would like to introduce the witnesses. the first is the ceo of wal- mart, the world's largest retailer. the second is the chairman and ceo of kimberly-clark, the world's top maker of personal paper products. the next witness is the president and ceo of a semiconductor manufacturing company, and finally, the president of a leading drug store chain can -- and pharmacy. gentlemen, you know the rules. i encourage you to summarize your statements in about five or six minutes. i also encourage you to be candid. life is short. [laughter] all right.
mr. duke, why do you not begin? >> chairman, ranking member, members of the committee. i appreciate the opportunity to testify today. we urgently need to modernize our tax code, and i thank you for taking on this issue. the ultimate outcome must be a strong, vibrant, jobs-creating u.s. economy. i hope all of you know your local wal-mart store back in your home state, but let me start with a few words about the company that we run out of arkansas. every week, we serve 106 million new customers, about one-third of the u.s. population. the business model that has earned our customers' trust is simple. we give them everyday low prices by passing on savings from our everyday low cost operations. last year, wal-mart paid $4.70
billion in corporate taxes in the united states, which was 3% of all corporate income taxes collected by the u.s. treasury. our effective corporate tax rate was 32.2%. many companies will testify before you theoretically. we actually pay them, but we are not here to ask for sympathy. the question is not whether or not wal-mart can get by under the current tax pressure. the real question is, is this structure the best approach for our country? we believe that it is not. as we begin this discussion, it is important to understand how wal-mart operations at home and around the world contribute to the u.s. economy. in the u.s., we operate over 4400 stores and clubs, and we import almost 1.4 million
associates' in the united states -- and we employ almost 1.4 in the unitediates states. every store that we build means jobs, construction jobs, and more opportunities for u.s. suppliers. wal-mart is growing around the world, which is good for the u.s. economy, as well. this allows us to source more goods from u.s. companies to sell in our stores around the world. 70% of our top international suppliers are u.s. companies, which creates and sustains american jobs. we are also one of the largest purchasers of american agricultural products. last year, we directly exported nearly $40 million worth of washington apples, california asparagus, florida grapefruit,
and other products. we look for opportunities to use american products as we build stores. like the parking lot lights, which are mainly manufactured in north carolina. when wal-mart goes overseas, we bring american companies with us. when we grow, they grow. so how do we reform the tax code to drive growth here at home and encourage america's competitiveness abroad? my advice is straightforward. lower the corporate rate as much as you can. make the tax base as broad as you can. and move to a territorial system as quickly as you can. without any of these three components, it will be impossible to achieve a fiscally responsible, simplified, and competitive tax system. and we need comprehensive solutions, not piecemeal
attempts to repeal this or that incentive. we will give up the existing incentives that benefit us if it means getting rid of them in a reformed system. taking these steps will help american companies compete abroad, and i believe that wal- mart is more likely to export washington apples or california asparagus than our foreign competitors. yet, these foreign competitors have an advantage, because they pay less in corporate income tax. for example, we compete in china against a company from the u.k. with the u.k. territorial system of taxation, they pay 25% to china on their business profits there and no additional tax when they bring money back to the u.k., and in our case, we pay 25% to china plus an additional
25% to cover the differential between the u.s. statutory rate and the chinese rate when we bring that money home. the result is that we are often out bid for retail side because companies with lower overall tax rates have a lower cost of capital -- we are often outbid for sites. the keys to tax reform are to lower the corporate rate, get rid of incentives that benefit some industries over others, and level the international plainfield with a territorial system. if we take these steps -- and level international playing field with a territorial system. more job creation at home. thank you, and i look forward to your questions. >> thank you very much, mr. duke. >> chairman, ranking member, and
distinguished members of the committee. they keep for allowing me to share my views. please, i would like to provide a brief overview of kimberly- clark and then discuss why we believe the current u.s. tax system hinders growth and puts american companies and workers at a competitive disadvantage. kimber the clerk will be 140 years old in 2012 -- kimberly- clark will be 140 years old. through the years, we have been providing consumers with the essentials for a better life, with brands like kleenex, and we estimate that one out of four people use our products every day, and they buy them at wal-mart and cbs, as well. in fact, -- wal-mart and cbs -- cvs, as well.
you may not know that we are also wrote a manufacturer of safety which we are also manufacture of some safety items -- we are also a manufacturer of safety items. surgical drapes and downs, and gloves, infection control, and pain management products -- surgical drapes and gowns. we have to have a global presence to serve them, and because many of the products we sell are lightweight and costly to ship, we have to manufacture a product close to where our consumers live and work. -- manufacture our product close to where our consumers live and work. the developing and emerging markets represent our biggest growth opportunities. for example, in the u.s., five
diapers a day to care for their babies, but in emerging markets, five diapers per week. this is a growth opportunity for us. to be successful in any market, businesses need for ground in which to grow. that fertile ground includes access to skilled employees, the reliability of energy and other resources, and a competitive, stable, and predictable tax and regulatory environment. so i would like to know address three key ways that we believe we can improve the fertile ground in the united states -- so i would now like to address three key ways. first, we need to have a more competitive tax rate. it averages 39%, which significantly exceeds the rates in other countries. combined rates is now 25% in one
area and is expected to decline further. in the competitive global markets, u.s. companies are at a significant disadvantage to those who have lower tax rates in their countries. when we see to grow outside our country, we are way behind before we even get started. worldwide earnings. in addition to the high tax rate, the u.s. taxes worldwide earnings of u.s.-based companies. most do not do that in a similar manner. under the current u.s. system, all repatriated income is subject to u.s. tax, which brings an incentive for companies to leave their money outside of the u.s. if we were to bring our in come back home to the u.s., we would have the freedom to invest them in new capital spending or return it to shareholders who in turn invest in the u.s. economy. cash kept overseas is more
likely to be invested overseas, created -- creating foreign, not american jobs. rather than restrict the free flow of capital, we need a territorial tax system that encourages companies to apply capital in a manner that supports the needs of businesses and create jobs. and third, we need to simplify our tax rules. our system is highly complex. you may not know that i was a cba ones, and i actually completed corporate income tax returns early in my career -- you may not know that i was a cpa once. this complexity requires u.s. companies to devote significant resources just to try to comply with the world's. the time and money spent on these activities takes away resources that could be spent on product innovation and market growth. we have a system of international taxation that reduces the cost of
administration, reduces the error, and is easier to monitor. i do not know if i could come up with the system that makes the taxes for kimberly-clark so easy that i could do them, but that is a worthy goal. some of the greatest products and brands in the world. unfortunately, we are against other competitors. to continue to prosper and deliver the essentials for a better life for another 104 years, a kimberly-clark must grow -- 104 years, kimberly- clark must grow. to do this, we need a tax system that is competitive with our global competitive -- competitors. we need a tax system that does not penalize us for making money outside the u.s.
mr. chairman, this is an important debate. many businesses face critical decisions about future investment and growth. you and your colleagues have an opportunity to create a level playing field for u.s. businesses to compete and win on a global basis. they do for giving me the opportunity to share my views on a tax system that supports american companies and that enables the growth of the american economy. and i am pleased to take any questions you may have. >> thank you, mr. falk. >> chairman, ranking member, others. we are a leading semiconductor innovator that move and store digital content. wheeler also a member of the semiconductor association and part of a tax reform working group. so i can offer a perspective.
i would like to think the opportunity for presenting our views on how the tax code can provide job creation and sustain growth for our country. before summarizing my ideas for tax reform, i want to give the reasons why corporate tax reform is essential to the continued growth and leadership in this critical industry. first, semiconductors are essential for innovation in every aspect of our modern economy and national security. advanced communications, manufacturing, health care, information technology, as well as national defense and homeland security. we are a fundamental building block of the broader technology industry, which supports 6 million jobs. studies show that semiconductors and the information technologies the unable to represent 3% of the economy but drive 25% of economic growth. third, semiconductors are a global industry with cable
competitors around the world. to date, the u.s. industry holds approximately a 50% share of the $300 billion worldwide market and represents america's largest export industry. in fact, exports are about 80% of our revenue today. finally, the semiconductor industry is a key driver of u.s. innovation. the industry invests in research and development, an amount higher. chip companies account for seven of the top 15 patent recipients in the u.s. in short, maintaining u.s. leadership in semiconductors is in our national interest and should be made a top priority in congress. tax reform is one part of an agenda to ensure that the u.s. remains a leader in innovation and economic growth. given the strategic nature of the chip industry, other countries are targeting our sector with grants and reduced
tax rates. in fact, china has specifically included their industry in their latest five-year plan, with a number of incentives focused on drawing more investment in china. to maintain u.s. leadership, our country must have a more competitive global tax structure. for example, it costs approximately $1 billion more to build and operate a semiconductor manufacturing facility in the u.s., compared with other countries. now, despite the perception that may be due to labor differences between the high and low labor rate country, in fact, the main cost differences are in tax benefits and other incentives. to achieve a more competitive tax environment for the u.s., a fundamental reform is necessary and must focus on three key elements. first, the u.s. should adopt a global the competitive tax rate. the average rate is approximately 25%. for us, our emerging competition is in china, where the rate is
approximately 15% for new technology businesses. in contrast, the combined corporate and federal tax rates -- many countries offer substantial tax holiday incentives for new high -- new technology investments, which effectively lowers the rate to 0% or single digits. tax reform must be competitive with rates of competing countries. second, our worldwide tax system creates an additional disincentive for u.s. companies. meaningful tax reform should include a move towards a territorial approach. a territorial system would enable countries to repatriate their profits to invest and create jobs in the u.s. the u.s. is the pit -- the u.s., combined with the highest tax rates, this is a huge penalty for companies competing on a global scale. finally, a tax reform should provide strong and permanent
incentives to encourage research and development in the u.s. research and development is the lifeblood of the semiconductor industry, but this is weak compared to our global competition, and it has lapsed 13 times in the past decades. it is complex and unreliable. given the competition for investment and jobs around the world, it is insufficient to encourage research and development here at home. the semiconductor industry was invented here, and the u.s. can remain the leader, but industry leadership is not an entitlement. at pmc, we must compete day in and day out, and we have proven that we can win on a level playing field. the u.s. semiconductor market was targeted by foreign governments. corporate tax reform and other policies can help maintain the future and pace of american
enterprise and innovation. i would be happy to answer any questions. >> thank you, mr. lang. >> thank you, chairman baca is, ranking member, and other members of the committee -- chairman baca sought -- chairman baucus, ranking member, and other members in the committee. we employ over 200,000 people in the u.s., including more pharmacists and nurse practitioners than anyone else in the nation, and we have a tax rate of -- something of us as the largest drugstore change because we operate cvs stores in the states and the district and puerto rico. many live within 3 miles of
their stores. paris i think as you note -- i think as you know, there are a prescription drug benefit options that best meet member needs, and they helped to drive down costs. that being said, we think this is more than a drug store chain. we considered ourselves as part of the fabric of american society, working to improve the lives and the health of our customers, and to provide those services of the lowest possible cost. because of that thinking, we have made significant investments in our people and in our infrastructure here in the u.s.. we believe that it is our obligation as part of the business community. now, the measure of our commitment, we have invested $10 billion of our earnings in our domestic operations and our employees, but we do believe that we can do more. our company is committed to
making significant future investments in our service offerings, our technology, our people, and other improvements to our infrastructure and operations. this will lower our cost of capital and enable us to make even greater investments in our business. for cvs caremark, a reduction in the corporate tax rate would specifically allow us to accelerate our investment in jobs and in our infrastructure. a return on our investments would benefit us all in the form of low wrote -- lower overall health-care costs and benefits for consumers. are effective income-tax rate is approximately 35%, and are combined federal and state effective income-tax rate is approximately 39% -- our combined federal and state
effective income-tax rate is approximately 39%. we pay billions annually and more than $4.30 billion when similar state, local payroll, and other taxes are considered. we have the high effective tax rate for two principal reasons, the first being that many of the tax policies that help industry have limited application to us. secondly, we have consistently chosen to reinvest our earnings and create jobs here in the u.s. in order to continue to be successful in an increasingly global marketplace, we must control costs. we must raise capital. and we must officially reinvests earnings. and although we have worked hard managing our operations to provide both capital for our business in return for our shareholders, our high effective tax rate probably limits the amount of earnings available for investment but also makes us less attractive to global
investors. reducing the maximum rate to create more competitive tax structure for u.s. corporations so we can effectively compete is both a thoughtful and responsible move. as i stated earlier, we are dedicated to improving care and lower ring costs for millions of americans. -- and laura ling -- lowering costs for millions of americans. this will help us lower the health-care costs and grow our economy, so i would like to thank the distinguished members of the committee for your attention today, and i would be happy to answer any questions you may have. >> thank you, mr. merlo. i think there is a feeling in the congress that we need to form the appropriate tax code, and individual, as well.
it is different than years ago. lower the rate, broaden the base, move to territorial, and so forth. et -- that is sorted in the abstract of what needs to be done. -- that is sort of in the abstract of what needs to be done. more job growth in the u.s., rather than more job growth overseas. if the corporate rate is lower and the base is broad and, -- broadened, presumably, you have more flexibility with where you locate your plants, etc. what assurance do we americans have that as a consequence of this change, more jobs will be in the u.s. rather than more
jobs overseas? we will start with mr. duke, if you could briefly touch on that. >> thank you, mr. chairman. first of all, i would say in the growth overseas, when wal-mart rose overseas, we bring american companies with us, and i would welcome any members of the committee to let us show you a wal-mart store in countries outside the united states. what we export to markets around the world. to those products that are on the shelves that are produced by american companies, it would be an example. the other would be even here in the united states and the growth and opportunity here in
the u.s., since we operate and build a retail stores. our employment is at four levels. we are not manufacturing the product, but we deliver it directly to consumers, -- >> essentially, you are saying -- >> we would do both. for a store that is open overseas, clearly, it would be both. i am not able to quantify one compared to the other because we open a small stores and large stores, but it would create -- we open small stores and large stores. >> my time is limited.
>> this is just going to mean that we will see more job loss over time, so getting us back to a level playing field is critically important. from the kimberly-clark perspective, we do research. note -- we bring in royalties on their intellectual property. as our business grows, we will do more research and development and have more staff year in the u.s. >> just to build on the research and development perspective, in 1990, we had the number one tax credit in the world for research and development. this is an area where having the incentives to actually develop in the u.s. has a real impact on decision making, and i will
give you one small company example, which is my own. we in the last year, 2010, added about 20% to our employee base. that is about 20% higher, which is good given the economic client -- climate. the bad news is only about 50% of those were in the u.s., and a lot of folks would maybe immediately conclude that those jobs were sent overseas to india or china, but, in fact, one- third of those jobs went to canada, where they have one of the most regressive tax credits in the world, so i think our brothers up north may have something we can learn from here. this is not the only decision we made, but they have done a very effective job in neutralizing some of the differences